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[2019] ZAGPPHC 39
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Body Corporate Of Calswald Crest v Mbatha (94948/2015) [2019] ZAGPPHC 39 (22 February 2019)
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REPUBLIC OF SOUTH AFRICA
IN THE HIGH COURT OF SOUTH AFRICA
GAUTENG DIVISION, PRETORIA
CASE NO: 94948/2015
22/2/2019
In the
matter between:
THE
BODY CORPORATE OF CALSWALD CREST
APPLICANT
And
SIFISO
MBATHA
RESPONDENT
ID NR:
[….]
JUDGMENT
MOSOPA
AJ
INTRODUCTION:
1. This is an
application for final sequestration of the estate of the Respondent
and that his estate be placed in the Master of the High Court.
2. The estate of
the Respondent was placed under provisional sequestration
on the 2
May 2017 with the return date of 12 June 2017. The matter was then
opposed by the Respondent and the matter was eventually
set down for
hearing on the opposed motion court roll of the 08
th
October 2018.
3. On the 09
th
of October 2018 counsel appearing on behalf of the Respondent
indicated that the Respondent intends applying for the postponement
of the matter. The matter was stood-down to the 11
th
of
October 2018 to allow the Respondent to file a substantive
application in support of postponement application. On the 11
th
of October 2018, I heard an application for a postponement and
dismissed such application with costs with full reasons and allowed
the matter to proceed.
FACTUAL
BACKGROUND
4. The
Applicant in this matter is a body corporate established in terms of
section 36 of the Sectional Titles Act,95 of 1986 with its primary
objective to attend to the management of the sectional title
scheme
known as Carlswald Crest established under scheme number SS1219/2007.
5. The
Respondent is the joint registered owner of units 19, 21, 23,25,44,46
and 48 in the sectional title development known as Carlswald Crest.
6. The
Applicant's duties as defined by the Act, is to collect levies from
members on a monthly basis, such as the Respondent, to be used for
payment of the Applicants' financial obligations. The levy imposed
on
the Respondent at that time was an amount of R1, 296, 00 per month.
7. Despite being
the joint registered owner of the above mentioned units,
this
application is only directed to the Applicant and the Applicant
contends that it will be a waste of legal fees to bring separate
application for the sequestration of all of the individual estates.
8. Since the
Respondent became a member of the Applicant on 09th November
2017
several summonses were issued against him for the recovery of the
arrear levies and the Applicant subsequently obtaining default
judgments against the Respondent for not defending such claims. The
Applicant avers that the Respondent currently owes the Applicant
more
than R386, 000, 00 and such amount will increase on monthly basis if
the Respondent fails to pay his monthly levies.
9. Several
attempts by the Sheriff to execute the warrant did not materialise.
On the 4th of October 2014, the Sheriff returned a nulla bona. after
the Respondent was served with warrant of execution under
case number
38093/2019 and the Respondent indicated to the Sheriff that " No
I do not have any immovable property which is
executable" and
the Sheriff reported that " No movable property/disposable
assets in terms of Section 68 were pointed
out, nor could any be
found by me after a diligent search and enquiry at a given address".
LEGAL PRINCIPLE
10.
Section
37 of the Sectional Titles Act,95 of 1986("Act") provides,
"Functions of Body Corporate ;
(1)
A body corporate referred to in section 36 shall
perform the functions entrusted to it by or under this Act or the
rules, and such
functions shall include;
(a) To establish for administrative expenses a fund
sufficient in the opinion of the body corporate for the repair,
upkeep, control, management and administration of the common property
(including reasonable provision for future maintenance and
repairs),for the payment of water and taxes and other local authority
charges for the supply of electric current, gas, water, fuel
and
sanitary and other services to the building or buildings and land,
and any other obligation of the body corporate;
(b) To require owners, whenever necessary, to make
contributions to such fund for the purpose of satisfying any claims
against the body corporate, provided that the body corporate shall
require the owner or owners of a section or sections entitled
to the
right to the exclusive use of a part or parts of the common property,
whether or not such right is registered or conferred
by the rules
made under the Sectional Titles Act,1971 (Act No.66 of 1971),to make
such additional contributions to the fund as
is estimated necessary
to defray the costs of rates and taxes, insurance and maintenance in
respect of any such part or parts,
including the provision of
electricity and water, unless in terms of the rules the owners
concerned are responsible for such costs.
(c) To determine from time to time the amounts to be
raised for the purpose of the aforesaid.
(d) To raise the amounts so determined by levying
contributions on the owners in proportion to the quotas of the
respective
section".
11. Section 8 of the
Insolvency Act,24 of 1936 (as amended), deals with acts of insolvency
and provides:
"A
debtor commits an act of insolvency
a. If he leaves the Republic
or being out of the Republic remains absent therefrom, or
departs
from his dwelling or otherwise absents himself, with intent by so
doing to evade or delay the payment of his debt;
b. If a court has given
judgment against him and he fails, upon the demand of the officer
whose duty is to execute that judgement, to satisfy it or indicate to
that officer disposable property sufficient to satisfy it,
or if it
appears from the return made by, that officer that he has not found
sufficient disposable property to satisfy the judgment;
c. If he makes or attempt to
make any disposition of any of his property which has or
would have
the effect of prejudicing the creditors or preferring one creditor
above another;
d. If he removes or attempts
any of his property with intent to prejudice his creditors
or to
prefer one creditor above another;
e. If he makes or offers to
make any arrangement with any of his creditors for releasing
him
wholly or partially from his debts;
f. If after having published
a notice of surrender of his estate which has not elapsed
or been
withdrawn in terms of section 6 or 7,he fails to comply with the
requirements of subsection (3) of section 4 or lodge ,
in terms of
that subsection, a statement which is incorrect or incomplete in any
material respect or fails to apply for the acceptance
of the
surrender of his estate on the date mentioned in the aforesaid notice
as a date on which such application to be made;
g. If he gives notice in
writing to one any of his creditors that he is unable to pay
any of
his debts;
h. If, being a trader he
gives notice in the Gazette in terms of subsection (1)of section
34,and is thereafter unable to pay all his debts".
12. Section 12 of the
Insolvency Act, provides;
(1)
If at the hearing pursuant to the aforesaid rule nisi
the court is satisfied that
(a)
The petitioning creditor has established against the
debtor a claim such as is mentioned in subsection (1) of section
9,and
(b)
The debtor has committed an act of insolvency or
insolvent, and
(c)
There is a reason to believe that it will be to the
advantage of creditors of the debtor if his estate is sequestrated,
it may sequestrate
the estate of the debtor.
13. It is trite
law that the onus of satisfying the above mentioned requirements as
stated
out in section 12 rests with the Applicant,(see Braithwaite V
Gilbert 1984 (4) SA 717 0N) at 718).
14. In Richter
v Riverside Estate (Pty) Ltd 1946 OPD 209 at 223 the court observed,
"insofar
as sequestration procedure in accordance with the
Insolvency Act is relevant, it must be taken into consideration that
the main
object of insolvency proceedings is to benefit creditors,
not one creditor or some creditors but the general body of creditors.
Insofar concursum creditorium comes into being once a sequestration
order is made, a further object of insolvency proceeding is
achieved
insofar as creditors are prosecuted against the possible greed and
mendacity of other creditors".
15. If an Applicant's claim
is bona fide disputed by the Respondent on reasonable grounds
an
application for a sequestration or winding up order cannot succeed.
In terms of the so-called Badenhorst Rule (Badenhorst v
Northern
Construction Enterprises (Pty) Ltd
1956 (2) SA 346(T)
at 347 H-348 C)
accepted by the Appeal Court in Kalil v Decotex Loccit, the
Respondent must show the existence of a bona fide dispute
on
reasonable grounds. Corbett AJ (as he was then) put it as follows
"consequently where the respondent shows on a balance
of
probability that its indebtedness to the applicant is disputed on
bona fide and reasonable grounds, the court will refuse a
winding up
order. The onus on the respondent is to show that it is not indebted
to the applicant it is merely to show that the
indebtedness is
disputed on bona fide and reasonable grounds".
DISCUSSION
16. As already
alluded before, the Applicant to be successful in this kind of
proceeding
must establish the following:
16.1
That it has a claim against the Respondent
16.2
The Respondent has committed an act of insolvency, and
16.3
It will be to the advantage of the
creditors
of the Respondent's estate if sequestrated.
17. The Applicant listed a
long list of summonses under different case numbers instituted
against the Respondent for the recovery of arrear levies. The
Respondent denies ever receiving such summonses. However the fact
of
the matter is that various default judgements were obtained against
the Respondent under various case number. Warrant of execution
was
issued which led to the Sheriff returning a nulla bona, notably the
return of the 4th of October 2014 .
18. The Respondent does not
deny ever defaulting on his obligation against the Applicant
but
contends that he has settled his outstanding debts to the Applicant.
However the Applicant's contention is that the Respondent
owes it an
amount in excess of R386, 000, 00 which will increase on monthly
basis if the Respondent continues not to pay his levies.
19. It appears from the
Respondent's contention , he does not deny liability to the
Applicant,
but contents that he owes far less than what the Applicant
is alleging what he owes. To this end the Respondent required an
indulgence
to supplement his papers to put certain amounts in
dispute.
20. The Respondent further
contended that, due to the fact that the units he co-owns are
bonded,
banks should have been served with the application.
21. Mr Vaster in argument
referred me to the decision of Suiwer Motors v Molobane
1961 (1) SA
759
(W) at 761, where it was held that bonded immovable property does
not constitute realisable property for sequestration proceedings.
He
then further contended that there was no need to serve the banks with
this application.
22. I am of a considered
view that a claim against the Respondent was made by the Applicant.
23. Turning now to the
second leg of the requirement, i.e. whether the Respondent has
committed an act of insolvency, in terms of section 8 (of the
Insolvency Act), the following is for consideration;
23.1 The Applicant issued a warrant of
execution against the Respondent in the Pretoria Magistrates
Court
under case number 38093/2014. The Respondent was personally served
with the warrant of execution by the Sheriff and he demanded
payment
from the Respondent. The Respondent informed the Sheriff that, he has
no immovable property which is executable.
23.2 Based on this information received
personally from the Respondent, the Sheriff noted the following
"this
is to certify that on the 04th of October 2014 at 08h55 at Casa
Blanca, Van Heerden Street, Halfway Garden, the amount
of R 7,3311,61
in satisfaction of his warrant and my costs, has been demanded from
Sfiso Mbatha, who informed me that he has no
money, property or
assets inter alia, wherewith to satisfy the said warrant or any
portion thereof in terms of section 66 (1) (a).
No movable
property/disposable assets in terms of section 66 were pointed out,
nor could any be found by me after a diligent search
and enquiry at
the given address".
23.3 This was not as a result of the
Sheriff satisfying himself that there is no executable property,
but
such information was voluntarily given to the Sheriff by the
Respondent.
24. The Respondent further
stated in his answering affidavit that he is paying debts
owed to the
financial lender despite being indebted to the Applicant. This is
further act of insolvency by the Respondent in terms
of section 8
(c),in that the Respondent prefers other creditors above others.
25. The Respondent cannot
make prompt monthly payments of the levies which resulted in
him
failing in arrears.
26. It is also not in
dispute that other creditors apart from the Applicant have obtained
judgments against the Respondent who ironically happens to be the
Body Corporates is a clear sign that the Respondent is factually
insolvent. It is therefore my considered view based on the above,
that the Applicant committed an act of insolvency.
27. Turning to the last
requirement, i.e that it will be to the advantage of the Respondent's
creditors if his estate is sequestrated ,the following are of
importance:
27.1 In Markin & Co v Friedland
1948 (2) SA
555
(W) at 559 Roper J observed; "In my opinion, the facts put
before the court must satisfy it that there is a reasonable prospect,
not necessary a likelihood but a prospect which is not too remote,
that some pecuniary benefit will result to creditors. It is
not
necessary to prove that the insolvent has any assets. Even if there
are none at all but there are reasons for thinking that
as a result
of enquiry under the Act some may be revealed or recovered for the
benefit of creditors, that is sufficient".
28. The financial position
of the Respondent is not known, what is before me is the undisputed
fact that the Respondent is gainfully employed.
29. It is clear that the
Respondent has other creditors apart from the Applicant and some
have
already obtained judgment against the Respondent.
30.
I am therefore of a view that the general body of
creditors of the Respondent will benefit if the estate of the
Respondent is sequestrated.
It is for those reasons that this
application must succeed.
ORDER
31. I therefore make the
following order;
1. The rule nisi dated 02
May 2017 is hereby confirmed.
2. The estate of the
Respondent is finally sequestrated and placed in the hands of the
Master of the High Court.
3. The respondent is
ordered to pay the costs of the application.
M.J MOSOPA
ACTING JUDGE OF THE HIGH COURT
PRETORIA HIGH COURT
APPERANCES
For
Applicant: Adv Voster
Instructed
by: E Y Stuart Incorporated
For the Respondent/: Adv Strauss
Instructed by: Scholtz Attorneys
Date
of Hearing: 11 October 2018.
Date
of Judgment: